Freelancers: The Business Ownership Mindset

By Andrew Longcore on January 26th, 2013 / Comments

So stop me if you have heard this one before: a new graduate from the local university is struggling to find a job. Sound familiar? How about the story about the employee within 10 years of retiring that had her position eliminated and cannot find another job? These seem to be common stories. Sometimes too common. The solutions are never appealing, they are either take a job that does not match your qualifications or do “side jobs” until you get hired.  For those that have chosen the latter option, welcome to the world of freelance work.

Freelance workers are becoming common place. Small businesses are hiring freelance workers on a needed basis because they cannot hire a full time employee for the position but they need the work done. Even larger businesses are trying to cut costs and will hire freelancers to fill spots for a short time. Freelancers are appearing in nearly every industry including marketing, management, design/illustration, and software development and information technology.  The important lesson for these freelance workers is regardless of your line of work, treat yourself as a business and not as an employee.

As an employee you often subject yourself to the will of your employer. You give up rights to your work, you do not limit the work you provide and you do not have a written agreement with your employer. As a business you want to take steps to protect your rights.

Protecting Your Business Rights

A written contract should always be present for all of your jobs or projects. This legal document will describe the work you are going to be doing, what you will be compensated, and then the specific terms that revolve around this job. You want to make sure that you are not providing free work and if the party you are working for wants additional work, a separate agreement should be executed.

You also want to make sure that your written agreement has provisions included that ensure you will get paid for the work that you provide. Freelance workers are often in the service industry.  This leads to the potential excuses for nonpayment like “It’s not exactly what we expected;” “We decided to scrap that project;” or “We decided to hire someone else.”  As an employee these statements do not affect you.  As a freelancer these statements all equate to “We do not want to pay you,” which is not an option.  The right provisions in your agreement will help make sure you are compensated for the work done, even if the contract is not completed.

There are other aspects of being a freelance worker that need to be considered too including tax issues, forming a business, or liability issues.  A small business attorney or adviser can assist you with these considerations.

Freelance work is a great idea if it is an option. It keeps you relevant to the industry you are in and it is not uncommon for those that hire freelancers to hire them to full time positions.  At the same time it’s important to not get pushed around. When you consider that many freelancers become entrepreneurs that form their own business because of the success they find as a freelance worker, why would you not want to get started on the right foot? As a freelance worker you are your own business and you need to act like it.

For more startup and small business legal information, visit Andrew’s Business Law Group blog.

Photo from Design Inspiration.

About the Author

Andrew Longcore

Startup and small business lawyer, entrepreneur, founder of The Business Law Group, and living the dream everyday. @BusinessLawGR